Calvarial bones are connected by fibrous sutures. These sutures provide a niche environment that includes mesenchymal stem cells (MSCs), osteoblasts, and osteoclasts, which help maintain calvarial bone homeostasis and repair. Abnormal function of osteogenic cells or diminished MSCs within the cranial suture can lead to skull defects, such as craniosynostosis. Despite the important function of each of these cell types within the cranial suture, we have limited knowledge about the role that crosstalk between them may play in regulating calvarial bone homeostasis and injury repair. Here we show that suture MSCs give rise to osteoprogenitors that show active bone morphogenetic protein (BMP) signalling and depend on BMP-mediated Indian hedgehog (IHH) signalling to balance osteogenesis and osteoclastogenesis activity. IHH signalling and receptor activator of nuclear factor kappa-Β ligand (RANKL) may function synergistically to promote the differentiation and resorption activity of osteoclasts. Loss of Bmpr1a in MSCs leads to downregulation of hedgehog (Hh) signalling and diminished cranial sutures. Significantly, activation of Hh signalling partially restores suture morphology in Bmpr1a mutant mice, suggesting the functional importance of BMP-mediated Hh signalling in regulating suture tissue homeostasis. Furthermore, there is an increased number of CD200+ cells in Bmpr1a mutant mice, which may also contribute to the inhibited osteoclast activity in the sutures of mutant mice. Finally, suture MSCs require BMP-mediated Hh signalling during the repair of calvarial bone defects after injury. Collectively, our studies reveal the molecular and cellular mechanisms governing cell–cell interactions within the cranial suture that regulate calvarial bone homeostasis and repair.